Our advice to companies that do any business with China (including those that merely have their products made in China) is to register their trademarks in China before they go there.
China is a first to register country, which means that whoever registers a trademark first gets it. I repeat: in China, whoever registers a trademark first gets it.
Yes, there is an exception for famous trademarks, but unless you are Coca-Cola, it is lunacy to bank on a Chinese court holding your trademark is famous when just going ahead and registering it costs so little. Most firms charge less than $2,500 for this. So even if a Chinese Court does rule that your trademark is famous, you will probably need to spend at least $50,000 in making your case. The economics just are not there.
Ferrari, the famous Italian car manufacturer, just proved our point.
In Ferrari is Famous, But Is the Horse Too?, China Business Law Blog wrote on how Ferrari lost its ability to use its famous (but not famous in China) horse logo in China. The post notes how after more then ten years of legal wrangling (anyone think that cost less than $100,000?), the Beijing First Intermediate Court ruled that Ferrari’s horse is not famous enough in China to be considered a famous trademark.
In 1996, White Clouds Sports Merchandise filed for trademark protection of a horse logo to go with a clothing line. Ferrari filed a timely opposition to this registration, claiming that granting White Clouds the trademark would confuse consumers. “The Chinese Trademark Office did not buy Ferrari’s argument, citing that White Clouds registered the graphic of the horse first.”
Undaunted, Ferrari appealed to China’s trademark review board, claiming “both the Ferrari with the horse graphic trademark and the horse graphic alone constituted famous trademarks.” The review board denied Ferrari’s appeal and Ferrari then took its case to court.
Before the court, Ferrari again claimed that the graphic of the horse is closely tied to the Ferrari mark, and it should be considered a famous trademark because the Ferrari trademark has become well known around the world, including in China. The court rejected Ferrari’s claim for the following three reasons:
1. Ferrari failed to provide sufficient evidence regarding its use of the horse logo in China.
2. China has a system for recognition of famous trademarks. Recognition of the name “Ferrari” as a famous trademark does not constitute recognition of the Ferrari horse graphic.
3. The issue in the case is the horse logo, not the Ferrari trade-name. The horse cannot be bootstrapped to the Ferrari trademark for similar protection.
China Business Law Blog concludes its post with some great advice:
After more than ten years of trekking in the Chinese legal system, Ferrari got a disappointing verdict. Hopefully, Ferrari got something else too: a lesson to register its trademarks, [and] related trademarks as early as possible.
January 22, 2023 UPDATE: We wrote this post in 2007 and it has been cited to multiple times since then. Because of this, we are often asked if everything in it is still true, to which we always answer, “yes, more so than ever.”